Abbott Reports 16.1 Percent Sales Growth in Fourth Quarter
- Worldwide Pharmaceutical Sales Increased 18.7 Percent -ABBOTT PARK, Ill., January 23, 2008 /PRNewswire-FirstCall/ -- Abbott today announced financial results for the fourth quarter ended Dec. 31, 2007.
* Diluted earnings per share, excluding specified items, were $0.93,
within Abbott's previously announced guidance range of $0.91 to
$0.93. Diluted earnings per share under Generally Accepted
Accounting Principles (GAAP) were $0.77.
* Worldwide sales in the fourth quarter increased 16.1 percent to $7.2
billion, including a favorable 4.5 percent effect of exchange rates.
For the full-year 2007, worldwide sales increased 15.3 percent to
$25.9 billion, including a favorable 3.2 percent effect of exchange
rates.
* U.S. pharmaceutical sales increased 16.6 percent and international
pharmaceutical sales increased 21.3 percent, driven by double-digit
growth in HUMIRA(R), Kaletra(R) and TriCor(R), and including $179
million of Niaspan(R) sales. HUMIRA achieved full-year worldwide
sales in excess of $3 billion in 2007 and the company forecasts
global sales for HUMIRA of approximately $4 billion in 2008.
* Worldwide medical products sales increased 11.5 percent, driven by
15.2 percent growth in worldwide Diabetes Care sales and 16.4
percent growth in international diagnostics sales.
* Worldwide nutritional products sales were led by 26.2 percent growth
in international nutritionals, with continued strong performance in
key emerging growth markets.
"The strength and balance of Abbott's broad mix of businesses helped us to deliver another year of consistent performance," said Miles D. White, chairman and chief executive officer, Abbott. "Both our sales and earnings per share increased double digits. Given the leadership positions of our major businesses, and the new products launching over the next year, we expect another year of strong results in 2008."
The following is a summary of fourth-quarter 2007 sales.
Impact of
Sales Summary - 4Q07 % Change Exchange on
Quarter Ended 12/31/07 ($ millions) vs. 4Q06 % Change
Total Sales $7,221 16.1 4.5
Total U.S. Sales $3,591 10.6 ---
Total International Sales $3,630 22.1 9.5
Worldwide Pharmaceutical Sales $4,197 18.7 4.6
U.S. Pharmaceuticals $2,306 16.6 ---
International Pharmaceuticals $1,891 21.3 10.4
Worldwide Nutritional Sales $1,187 11.2 (a) 2.8
U.S. Nutritionals $616 0.2 (a) ---
International Nutritionals $571 26.2 6.6
Worldwide Diagnostics Sales (b) $859 12.8 6.8
U.S. Diagnostics $213 3.0 ---
International Diagnostics $646 16.4 9.4
Worldwide Vascular Sales $417 7.2 4.4
U.S. Vascular $196 (12.8) ---
International Vascular $221 34.3 10.3
Other Sales (c) $561 21.2 4.3
a Reflects the impact of the completion of the U.S. co-promotion of
Synagis in 2006. Excluding the U.S. sales of Synagis in 2006,
Worldwide Nutritional Sales increased 17.8 percent and U.S.
Nutritional Sales increased 11.0 percent.
b Includes sales from the molecular diagnostics and core laboratory
diagnostics businesses, which includes point of care.
c Includes sales from diabetes, bulk pharmaceuticals, spine and animal
health businesses.
Note: See "Consolidated Statement of Earnings" for more information.
The following is a summary of sales for the full-year 2007.
Impact of
Sales Summary - FY07 % Change Exchange on
Twelve Months Ended 12/31/07 ($ millions) vs. FY06 % Change
Total Sales $25,914 15.3 3.2
Total U.S. Sales $12,874 12.0 ---
Total International Sales $13,040 18.8 6.6
Worldwide Pharmaceutical Sales $14,632 18.0 3.3
U.S. Pharmaceuticals $7,806 19.2 ---
International Pharmaceuticals $6,826 16.8 7.0
Worldwide Nutritional Sales $4,388 1.7 (a) 1.7
U.S. Nutritionals $2,348 (9.4)(a) ---
International Nutritionals $2,040 18.4 4.4
Worldwide Diagnostics Sales(b) $3,158 11.1 4.7
U.S. Diagnostics $820 2.6 ---
International Diagnostics $2,338 14.4 6.5
Worldwide Vascular Sales $1,663 53.8 3.1
U.S. Vascular $863 33.5 ---
International Vascular $800 83.9 7.7
Other Sales(c) $2,073 12.5 3.6
a Reflects the impact of the completion of the U.S. co-promotion of
Synagis in 2006. Excluding the U.S. sales of Synagis in 2006,
Worldwide Nutritional Sales increased 11.3 percent and U.S.
Nutritional Sales increased 5.7 percent.
b Includes sales from the molecular diagnostics and core laboratory
diagnostics businesses, which includes point of care.
c Includes sales from diabetes, bulk pharmaceuticals, spine and animal
health businesses.
Note: See "Consolidated Statement of Earnings" for more information.
The following is a summary of Abbott's fourth-quarter 2007 sales for
selected products.
Quarter Ended 12/31/07 Percent Percent Percent
(dollars in millions) Change Rest Change Change
U.S. vs. of vs. Global vs.
Sales 4Q06 World 4Q06 Sales 4Q06
Pharmaceutical Products
HUMIRA $527 42.8 $427 70.4(a) $954 53.9
Depakote $435 13.4 $26 25.8 $461 14
TriCor $392 20.5 --- --- $392 20.5
Kaletra $153 11.1 $218 37.4(b) $371 25.2
Biaxin (clarithromycin) $16 (71.7) $184 2.3(c) $200 (15.2)
Ultane/Sevorane $50 (13.6) $150 9.7(d) $200 2.8
Niaspan $179 n/a --- --- $179 n/a
Synthroid $132 15.5 $21 22.2 $153 16.4
Nutritional Products
Pediatric Nutritionals $325 10.8 $302 30.5 $627 19.5
Adult Nutritionals $280 10.5 $270 21.7(e) $550 15.7
Medical Products
Abbott Diabetes Care $134 (0.3) $200 28.7(f) $334 15.2
Coronary Stents $77 27.5 $106 61.6 $183 45.2
Other Coronary $63 (29) $80 13.5 $143 (10.1)
Endovascular $56 (25.3) $35 23.4 $91 (11.9)
a Without the positive impact of exchange of 16.9 percent, HUMIRA
sales increased 53.5 percent internationally.
b Without the positive impact of exchange of 10.3 percent, Kaletra
sales increased 27.1 percent internationally.
c Without the positive impact of exchange of 8.1 percent,
clarithromycin sales decreased 5.8 percent internationally.
d Without the positive impact of exchange of 9.3 percent, Sevorane
sales increased 0.4 percent internationally.
e Without the positive impact of exchange of 7.4 percent, Adult
Nutritionals sales increased 14.3 percent internationally.
f Without the positive impact of exchange of 11.6 percent, Abbott
Diabetes Care sales increased 17.1 percent internationally.
n/a = Percent change is not applicable due to the acquisition of Niaspan in the fourth-quarter 2006.
The following is a summary of sales for the full-year 2007 for selected products.
Twelve Months Ended 12/31/07 Percent Percent Percent
(dollars in millions) Change Rest Change Change
U.S. vs. of vs. Global vs.
Sales FY06 World FY06 Sales FY06
Pharmaceutical Products
HUMIRA $1,651 40.4 $1,413 62.9(a) $3,064 49.9
Depakote $1,480 20.3 $95 21.7 $1,575 20.4
Kaletra $538 5.0 $787 26.3(b) $1,325 16.7
TriCor $1,218 16.2 --- --- $1,218 16.2
Ultane/Sevorane $200 (23.4) $559 3.9(c) $759 (5.0)
Biaxin (clarithromycin) $36 (75.9) $688 3.5(d) $724 (11.2)
Niaspan $658 n/a --- --- $658 n/a
Synthroid $458 (2.7) $75 17.2 $533 (0.3)
Nutritional Products
Pediatric Nutritionals $1,233 9.4 $1,093 21.6 $2,326 14.8
Adult Nutritionals $1,077 1.9 $947 14.9(e) $2,024 7.6
Medical Products
Abbott Diabetes Care $553 1.3 $696 18.0(f) $1,249 9.9
Coronary Stents $306 n/m $366 n/m $672 n/m
Other Coronary $300 13.0 $304 59.8 $604 32.5
Endovascular $257 0.8 $130 42.9 $388 11.9
a Without the positive impact of exchange of 13.2 percent, HUMIRA
sales increased 49.7 percent internationally.
b Without the positive impact of exchange of 7.8 percent, Kaletra
sales increased 18.5 percent internationally.
c Without the positive impact of exchange of 6.2 percent, Sevorane
sales decreased 2.3 percent internationally.
d Without the positive impact of exchange of 5.0 percent,
clarithromycin sales decreased 1.5 percent internationally.
e Without the positive impact of exchange of 4.9 percent, Adult
Nutritionals sales increased 10.0 percent internationally.
f Without the positive impact of exchange of 8.4 percent, Abbott
Diabetes Care sales increased 9.6 percent internationally.
n/a = Percent change is not applicable due to the acquisition of Niaspan in the fourth-quarter 2006.
n/m = Percent change is not meaningful.
Business Highlights
* HUMIRA(R) Approved for Psoriasis in United States and Europe --
Abbott recently received European and U.S. regulatory approval for
HUMIRA for the treatment of moderate to severe plaque psoriasis.
Psoriasis, the fifth indication approved for HUMIRA, affects 125
million people worldwide. The launch of the psoriasis indication is
now underway.
* Kaletra(R) Approved for Pediatric Use -- In November, Abbott
received U.S. Food and Drug Administration (FDA) approval for a new
lower-strength tablet formulation of its leading HIV protease
inhibitor. Kaletra is the only co-formulated protease inhibitor
tablet approved for use in children. The lower-strength formulation
is under active review in Europe and upon approval, Abbott intends
to register this formulation broadly around the world. More than 2
million children worldwide are living with HIV/AIDS.
* Fourth-Quarter Product Submissions -- During the quarter, Abbott
completed the FDA submissions of two pharmaceutical therapies, ABT-
335 and controlled-release Vicodin(R). ABT-335 is a next-generation
fenofibrate to treat triglycerides. Controlled-release Vicodin is an
extended-release formulation of the pain medication Vicodin. Also in
the fourth quarter, TAP, Abbott's joint venture with Takeda
Pharmaceutical, announced the FDA submission of TAK-390MR, a new
proton pump inhibitor, to treat digestive disorders.
* Simcor(R) Data Presented at American Heart Association Conference --
In November, Abbott presented data on Simcor, Abbott's fixed-dose
combination of Niaspan(R) and simvastatin currently under FDA
regulatory review. Data demonstrated Simcor is effective at lowering
non-HDL cholesterol while demonstrating improvements on other key
lipids, such as LDL "bad" and HDL "good" cholesterol and
triglycerides.
* XIENCE(TM) V Receives Recommendation for Approval -- In November,
the Circulatory System Devices Advisory Panel to the FDA recommended
approval for the XIENCE V drug-eluting stent. XIENCE V is the first
drug-eluting stent to demonstrate superiority to another drug-
eluting stent in the primary endpoint of in-segment late loss in a
randomized controlled head-to-head trial. Additionally, XIENCE V
showed clinical superiority in the safety and efficacy endpoint of
major adverse cardiac events (MACE).
* Fully-Automated Blood Screening Test Approved -- In January, Abbott
announced FDA approval of its first fully-automated blood screening
test for the human T-lymphotropic virus type I and II (HTLV-I and
HTLV-II) for use on the ABBOTT PRISM(R) instrument. These viruses
are associated with several diseases including human T-cell leukemia
and neurological disorders. ABBOTT PRISM also includes four
hepatitis tests and is used in more than 30 countries.
Abbott issues earnings-per-share outlook for 2008
Abbott is announcing earnings-per-share guidance of $3.20 to $3.25 for the full-year 2008 and earnings-per-share guidance for the first-quarter 2008 of $0.61 to $0.63, both excluding specified items.
Abbott forecasts specified items for the full-year 2008 of approximately $0.08 per share, primarily associated with previously announced cost reduction initiatives. Including specified items, projected earnings per share under GAAP would be $3.12 to $3.17 for the full-year 2008.
Abbott forecasts specified items for the first-quarter 2008 of approximately $0.03 per share, primarily associated with previously announced cost reduction initiatives. Including these specified items, projected earnings per share under GAAP would be $0.58 to $0.60 for the first-quarter 2008.
Abbott declares quarterly dividend
On Dec. 14, 2007, the board of directors of Abbott declared the company's quarterly common dividend of 32.5 cents per share. The cash dividend is payable Feb. 15, 2008, to shareholders of record at the close of business on Jan. 15, 2008. This marks the 336th consecutive dividend paid by Abbott since 1924.
About Abbott
Abbott is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs 65,000 people and markets its products in more than 130 countries.
Abbott's news releases and other information are available on the company's Web site at http://www.abbott.com. Abbott will webcast its live fourth-quarter earnings conference call through its Investor Relations Web site at http://www.abbottinvestor.com at 8 a.m. Central time today. An archived edition of the call will be available after 11 a.m. Central time.
- Private Securities Litigation Reform Act of 1995 -
A Caution Concerning Forward-Looking Statements
Some statements in this news release may be forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. We caution that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated. Economic, competitive, governmental, technological and other factors that may affect Abbott's operations are discussed in Item 1A, "Risk Factors," to our Annual Report on Securities and Exchange Commission Form 10-K for the year ended Dec. 31, 2006, and are incorporated by reference. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments.
Abbott Laboratories and Subsidiaries
Consolidated Statement of Earnings
Fourth Quarter Ended December 31, 2007 and 2006
(unaudited)
Percent
2007 2006 Change
Net Sales $7,221,351,000 $6,217,969,000 16.1
Cost of products sold 3,161,680,000 2,865,612,000 10.3
Research and development 662,401,000 596,167,000 11.1
Acquired in-process and
collaborations research &
development --- 1,307,000,000 n/m
Selling, general and
administrative 1,879,269,000 1,703,112,000 10.3
Total Operating Cost and
Expenses 5,703,350,000 6,471,891,000 (11.9)
Operating earnings (loss) 1,518,001,000 (253,922,000) n/m
Net interest expense 101,145,000 89,261,000 13.3
Net foreign exchange (gain) loss (1,061,000) 10,803,000 n/m
(Income) from TAP Pharmaceutical
Products Inc. joint venture (121,574,000) (118,528,000) 2.6
Other (income) expense, net 56,566,000 6,642,000 n/m 1)
Earnings (loss) before taxes 1,482,925,000 (242,100,000) n/m
Taxes on earnings 279,898,000 234,114,000 19.6
Net Earnings (Loss) $1,203,027,000 $(476,214,000) n/m
Net Earnings Excluding Specified
Items, as described below $1,452,565,000 $1,152,965,000 26.0 2)
Diluted Earnings (Loss) Per
Common Share $0.77 $(0.31) n/m
Diluted Earnings Per Common
Share, Excluding Specified
Items, as described below $0.93 $0.75 24.0 2)
Average Number of Common Shares
Outstanding Plus Dilutive Common
Stock Options and Awards 1,562,664,000 1,533,489,000
1) Other (income) expense, net in 2007 and 2006 is primarily associated
with adjustments related to Abbott's ownership of Boston Scientific
stock. These items have been reflected as specified items in both
periods as discussed in Q&A Answer 6.
2) 2007 Net Earnings Excluding Specified Items excludes after-tax
charges of $42 million, or $0.03 per share, for acquisition
integration, $34 million, or $0.02 per share, for fair-value loss
adjustments related to Boston Scientific stock, $26 million, or
$0.02, for write-down of Omnicef inventory and $148 million, or
$0.09 per share, for cost reduction initiatives and other.
2006 Net Earnings Excluding Specified Items excludes after-tax
charges of $1.3 billion, or $0.85 per share, for acquired in-process
and collaborations research and development primarily related to the
Kos acquisition, $60 million, or $0.04 per share, for acquisition
integration, $74 million, or $0.05 per share, primarily for costs
associated with an asset impairment related to the generic
introduction of Biaxin XL, $69 million, or $0.04 per share, for
litigation associated with the settlement of an intellectual
property matter and $126 million, or $0.08 per share, for costs
associated with cost reduction initiatives and other.
NOTE: See attached questions and answers section for further explanation of Consolidated Statement of Earnings line items.
n/m = Percent change is not meaningful.
Abbott Laboratories and Subsidiaries
Consolidated Statement of Earnings
Year Ended December 31, 2007 and 2006
(unaudited)
Percent
2007 2006 Change
Net Sales $25,914,238,000 $22,476,322,000 15.3
Cost of products sold 11,422,046,000 9,815,147,000 16.4
Research and development 2,505,649,000 2,255,271,000 11.1
Acquired in-process and
collaborations research &
development --- 2,014,000,000 n/m
Selling, general and
administrative 7,407,998,000 6,349,685,000 16.7
Total Operating Cost and
Expenses 21,335,693,000 20,434,103,000 4.4
Operating earnings 4,578,545,000 2,042,219,000 124.2
Net interest expense 456,390,000 292,347,000 56.1
Net foreign exchange (gain) loss 14,997,000 28,441,000 (47.3)
(Income) from TAP Pharmaceutical
Products Inc. joint venture (498,016,000) (475,811,000) 4.7
Other (income) expense, net 135,526,000 (79,128,000) n/m 1)
Earnings before taxes 4,469,648,000 2,276,370,000 96.3
Taxes on earnings 863,334,000 559,615,000 54.3
Net Earnings $3,606,314,000 $1,716,755,000 110.1
Net Earnings Excluding Specified
Items, as described below $4,429,146,000 $3,880,826,000 14.1 2)
Diluted Earnings Per Common Share $2.31 $1.12 106.3
Diluted Earnings Per Common
Share, Excluding Specified
Items, as described below $2.84 $2.53 12.32 2)
Average Number of Common Shares
Outstanding Plus Dilutive Common
Stock Options and Awards 1,560,057,000 1,536,724,000
1) Other (income) expense, net in 2007 and 2006 is primarily associated
with adjustments related to Abbott's ownership of Boston Scientific
(BSX) stock. 2007 also includes realized gains on the sales of the
BSX stock. These items have been reflected as specified items in
both periods.
2) 2007 Net Earnings Excluding Specified Items excludes after-tax
charges of $206 million, or $0.13 per share, for acquisition
integration, $92 million, or $0.06 per share, for a contract
termination, $75 million, or $0.05 per share, for fair-value loss
adjustments, net of realized gains, related to Boston Scientific
stock, $60 million, or $0.04 per share, for write-down of Omnicef
inventory, $17 million, or $0.01 per share, for transaction and
separation costs relating to the terminated sale of the core
laboratory diagnostics business, and $373 million, or $0.24 per
share, for cost reduction initiatives and other.
2006 Net Earnings Excluding Specified Items excludes after-tax
charges of $1.7 billion, or $1.13 per share, for acquired in-process
and collaborations research and development, $141 million, or $0.09
per share, for cost reduction initiatives, $220 million, or $0.14
per share, for integration activities and other primarily related to
the Guidant acquisition, $74 million, or $0.05 per share, primarily
for costs associated with an asset impairment related to the generic
introduction of Biaxin XL, $70 million, or $0.05 per share, for
costs associated with Abbott's decision to discontinue the
commercial development of the ZoMaxx drug-eluting stent, $69
million, or $0.04 per share, for litigation costs associated with
the settlement of an intellectual property matter and $53 million,
or $0.04 per share, for a philanthropic contribution to the Abbott
Fund. These specified items were partially offset by an after-tax
gain of ($70 million), or ($0.04) per share, for fair-value
adjustments for the gain-sharing aspect of the Boston Scientific
stock purchase and a favorable adjustment to tax expense of ($132
million), or ($0.09) per share, as a result of the resolution of
prior years' tax audits.
NOTE: See attached questions and answers section for further explanation of Consolidated Statement of Earnings line items.
n/m = Percent change is not meaningful.
Questions & Answers
Q1) What drove the 18.7 percent worldwide pharmaceutical sales growth?
A1) U.S. pharmaceutical sales growth of 16.6 percent was led by strong
performance across several major brands. HUMIRA increased more than
40 percent as market demand continued to grow across the
rheumatology, dermatology and gastroenterology segments. The launch
of the Crohn's indication is proceeding well, with HUMIRA market
share exceeding 30 percent in less than a year since launch.
Abbott's lipid franchise also performed well in the quarter, with
strong sales of Niaspan and TriCor. U.S. pharmaceutical sales
increased in the quarter despite a decline in Omnicef sales due to
generic competition.
International pharmaceutical sales increased 21.3 percent during the
quarter, including a 10.4 percent favorable impact from exchange.
International growth was driven by HUMIRA, which grew 70.4 percent,
and Kaletra, which grew 37.4 percent, based on the continued
strength of the international launch of Kaletra tablets.
Q2) What drove the double-digit growth in global nutritionals and
medical products sales?
A2) Global Nutritional sales performance was led by 26.2 percent growth
in international nutritionals, including a 6.6 percent favorable
impact from exchange, with continued strong growth in Latin American
and Asian markets. Excluding the impact of Synagis, U.S. nutritional
sales increased 11.0 percent, driven by 10.8 percent growth in
pediatric nutritional sales.
Medical products sales growth of 11.5 percent was led by global
Diabetes Care sales, which increased 15.2 percent. In addition, the
core laboratory diagnostics business grew 11.0 percent and point of
care sales were up 26.2 percent. Abbott Vascular achieved sales of
more than $400 million, up 7.2 percent. This performance was
driven by international sales of XIENCE V and continued growth in
bare metal stents, partially offset by other coronary sales,
reflecting lower third-party catheter sales due to a decline in the
percutaneous coronary intervention (PCI) market. In addition, Abbott
Molecular sales increased 26.3 percent this quarter.
Q3) What drove R&D and SG&A spending in the quarter?
A3) The company is on track for five major new product launches in 2008.
This level of late-stage pipeline activity has been supported by
increased R&D and SG&A spending.
R&D investment reflects continuing progress in our pharmaceutical
and medical products pipelines, including new HUMIRA indications;
ABT-874, our anti-IL-12/23 therapy in Phase III development;
controlled-release Vicodin; and, XIENCE V, our next generation
drug-eluting stent, as well as several promising Phase I and Phase
II clinical programs in neuroscience and oncology.
SG&A expense included new and ongoing promotional initiatives,
including spending to support the launch of new indications for
HUMIRA, the international launch of XIENCE V, and preparation for
five major product launches in 2008.
Q4) How does the fourth-quarter gross margin profile compare to the
prior year?
A4) The gross margin ratio before and after specified items is shown
below (dollars in millions):
4Q07 4Q06
Cost of Gross Cost of Gross
Products Gross Margin Products Gross Margin
Sold Margin % Sold Margin %
As reported $3,162 $4,060 56.2% $2,866 $3,352 53.9%
Adjusted for specified items:
Asset impairment - - - ($98) $98 1.6%
Omnicef inventory
write-down ($33) $33 0.5% - - -
Litigation settlement - - - ($90) $90 1.4%
Cost reduction initiatives
and other ($118) $118 1.6% ($140) $140 2.3%
As adjusted $3,011 $4,211 58.3% $2,538 $3,680 59.2%
The comparison of the 2007 adjusted gross margin ratio of 58.3
percent to 2006 was impacted by the reduction in the contribution
from Synagis in the United States, generic competition for Omnicef,
and higher commodity costs in our nutritionals business.
Q5) Why did Net Interest Expense increase from the prior year?
A5) Net Interest Expense increased over the prior year primarily as a
result of debt related to the Kos Pharmaceuticals acquisition.
Q6) How did specified items affect reported results?
A6) Specified items impacted fourth-quarter results as follows (dollars
in millions, except earnings-per-share data):
4Q07 4Q06
Earnings Earnings
After- After-
Pre-tax tax EPS Pre-tax tax EPS
As reported $1,483 $1,203 $0.77 ($242) ($476) ($0.31)
Adjusted for specified items:
Acquired in-process and
collaborations R&D - - - $1,307 $1,300 $0.85
Asset impairment - - - $98 $74 $0.05
Acquisition integration $52 $42 $0.03 $79 $60 $0.04
Omnicef inventory
write-down $33 $26 $0.02 - - -
Fair-value adjustments
for BSX stock and gain
on financial instruments $53 $34 $0.02 $6 $4 -
Litigation settlement - - - $90 $69 $0.04
Cost reduction initiatives
and other $183 $148 $0.09 $155 $122 $0.08
As adjusted $1,804 $1,453 $0.93 $1,493 $1,153 $0.75
Acquisition integration relates to costs associated with the
acquisitions of Guidant Vascular and Kos Pharmaceuticals. The
Omnicef inventory write-down relates to an adjustment due to the
generic introduction of Omnicef. Also, in accordance with SFAS 159,
Abbott's investment in BSX stock is being accounted for at fair
value. Changes in the fair value are reflected in the income
statement and tracked as a specified item, along with any related
realized gains/losses on disposition of this stock. Cost reduction
initiatives and other relate primarily to continuing efforts to
improve efficiencies in our global manufacturing operations. This
includes the fourth-quarter actions to streamline operations in our
vascular business as a result of improved manufacturing efficiencies
and a decline in the percutaneous coronary intervention (PCI)
market. These actions included the closure of the former ZoMaxx
drug-eluting stent manufacturing facility and other manufacturing
related reductions.
The pre-tax impact of the specified items by Consolidated Statement
of Earnings line item is as follows (dollars in millions):
4Q07
Cost of Other
Products (Income)/
Sold R&D SG&A Expense
As reported $3,162 $662 $1,879 $56
Adjusted for specified items:
Omnicef inventory write-down $33 - - -
Acquisition integration $12 $3 $37 -
Fair-value adjustments for BSX stock - - - $53
Cost reduction initiatives and other $106 $23 $54 -
As adjusted $3,011 $636 $1,788 $3
Q7) What was the tax rate in the quarter?
A7) In line with the previous forecast, the tax rate this quarter,
excluding specified items, was 19.5 percent. The reconciliation of
the tax rate for the quarter is provided below:
4Q07
Pre-tax Income Tax
Income Tax Rate
As reported $1,483 $280 18.9%
Specified items $321 $71 22.4%
Excluding specified items $1,804 $351 19.5%
Q8) How did the TAP joint venture perform this quarter?
A8) Income from the TAP joint venture was in line with previous
forecasts. Prevacid sales were $550 million and Lupron sales were
$171 million.
Q9) What are some near-term opportunities in Abbott's pipeline?
A9) Abbott has a number of promising late-stage programs in its
pharmaceutical and medical products pipeline, including:
* HUMIRA
o Psoriasis -- Launched in Europe and the United States in
the first quarter of 2008.
o Juvenile RA -- Submitted for regulatory approval in May of
last year.
o Ulcerative colitis -- Currently in Phase III development.
* XIENCE V Drug-Eluting Stent (DES) -- In the fourth quarter, the
Circulatory System Devices Advisory Panel to the U.S. Food and
Drug Administration (FDA) recommended approval for the XIENCE V
drug-eluting stent.
* Controlled-release Vicodin -- A controlled-release form of
Abbott's pain brand, Vicodin, was submitted for U.S. regulatory
approval in the fourth quarter of 2007.
* Simcor -- Simcor, a combination therapy to address both HDL and
LDL cholesterol, was submitted for FDA approval in April of
last year. Phase III Simcor data were presented at the American
Heart Association meeting in November 2007.
* ABT-335 -- Abbott's next-generation fenofibrate was submitted
for U.S. regulatory approval in the fourth quarter of 2007. In
addition, ABT-335 is part of the fixed-dose combination with
Crestor that is in Phase III development.
* ABT-874 -- In Immunology, Abbott's anti-IL-12/23 biologic, ABT-
874, has demonstrated promising results in early studies for
Crohn's disease and psoriasis. The company moved ABT-874 into
Phase III development for psoriasis in December 2007.
* Flutiform -- A combination asthma treatment in Phase III
development, Flutiform is expected to be submitted for U.S.
regulatory approval in the second half of 2008. Abbott will
promote the product in the United States.
* Diabetes Care Pipeline -- FreeStyle Freedom Lite was
successfully launched internationally last year and is pending
approval in the United States. Abbott's FreeStyle Navigator
Continuous Glucose Monitoring System was launched in Europe
last year and is under active U.S. FDA review. Also in
development is a fully integrated blood glucose monitoring
system combining a meter, test strips and lancing capabilities
in one device.
* m2000 Molecular Diagnostics System -- Last year, Abbott
received FDA approval for the RealTime HIV-1 viral load test
for use on the m2000 molecular diagnostics system. Abbott
expects to expand its U.S. menu of infectious disease assays in
the future.
Q10) What are some mid- and early-stage opportunities in Abbott's broad-
based pipeline?
A10) Abbott is advancing leading-edge scientific discoveries in its mid-
and early-stage pharmaceutical and medical products pipeline.
Following are selected areas of emphasis:
* Neuroscience
o Abbott's neuroscience pipeline includes several unique
approaches for treating a number of diseases including
schizophrenia, ADHD, Alzheimer's disease and pain.
Compounds under development target neuronal nicotinic
receptors (NNRs), which play a role in regulating pain,
memory and other neurological functions.
* Oncology
o In 2007, Abbott announced a collaboration with Genentech
to develop and commercialize two Abbott discovered
oncology compounds. These include a multi-targeted kinase
inhibitor and Bcl-2 family protein antagonist. Both
represent promising, unique approaches to treating cancer.
Abbott and Genentech will work together on all aspects of
research, development and commercialization.
o Additional oncology compounds in Abbott's pipeline that
are not part of the collaboration include: a PARP-
inhibitor, which prevents DNA repair in cancer cells,
enhancing the effectiveness of current cancer therapies;
an oral anti-mitotic in Phase II for non-small cell lung
cancer and neuroblastoma; and, a biologic anti-tumor agent
with a novel mechanism of action.
* Hepatitis C
o Abbott has partnered with Enanta Pharmaceuticals to
develop protease inhibitors for the treatment of hepatitis
C (HCV), which affects more than 170 million people
worldwide. Abbott also has an internal HCV polymerase
program in early-stage development.
* Bioabsorbable Drug-Eluting Stent
o Abbott has presented promising data from the world's first
clinical trial (ABSORB) for a fully-bioabsorbable drug-
eluting stent (DES) to treat coronary artery disease. The
bioabsorbable DES is designed to be slowly and completely
metabolized by the body over time.
CONTACT: Financial, John Thomas, +1-847-938-2655, Larry Peepo,+1-847-935-6722, Tina Ventura, +1-847-935-9390, or Media, Melissa Brotz,+1-847-935-3456, Scott Stoffel, +1-847-936-9502, all of Abbott
Web site: http://www.abbott.com/
Ticker Symbol: (NYSE:ABT)
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Posted: January 2008
